Title Insurance

“A contractual arrangement entered into to indemnify loss or damage resulting from defects or problems relating to the ownership of real property, or from the enforcement of liens that exist against it.” – Dictionary.com definition of “Title Insurance”

We have heard it before, but many first-time homebuyers don’t understand the term, “Title Insurance.” In laymen’s terms, the title is proof and evidence that the piece of property is the lawful possession of the owner. What title insurance does is protect real estate owners and lenders, in case of property loss or damage. Property loss or damage can be caused by liens, encumbrances, or defects in the title. Every policy for title insurance has unique terms and conditions, too.

Buying a home? Well there are two steps when it comes to title insurance. An attorney or company has to check property records for errors or any mistakes, to ultimately verify that the seller really owns the home. Then, the person or company doing the search contacts an underwriting company to give a policy that will pay to defend you in court if anyone challenges your title and will compensate any potentially lost equity. Homebuyers usually need two policies, an owner’s policy for them, and a lender’s policy which protects the lender. The lender requires the buyer to have title insurance for the mortgage, too.

If you lose your home over a dispute about the title, the owner’s policy could keep your down payment, and any money invested into the home, safe. Legal fees are also covered under most owner’s polices.

Cost is determined by many factors including property location, property price, and extent of coverage. A federal law states that a seller cannot lock a buyer into one Title Company, so as a buyer, you can do as much research as you want. But when you get a mortgage, the title insurance is usually dictated by the agent. Any questions can always be answered by the Title Company - they are on your side and there to help.

If you are thinking about buying a new home or have more questions on title insurance, it’s best to start with speaking to a qualified mortgage professional. For more information on buying a home and mortgage terms, please feel free to contact the Housing Buzz Team today.

We are an Equal Housing Lender. We do business in accordance with federal fair lending laws. We make loans without regard to race, color, religion, national origin, sex, familial status, military status, handicap, disability, ancestry, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.